Have you been following the debate in the European Parliament about limiting CO2 emissions to 120 grams per km in 2012? (The European industry average was 161g/km in 2005.) France and Italy are gung-ho about this, as most Renaults and Fiats can probably meet that limit. Germany is strongly opposed, as it would devastate Mercedes, BMW, and especially Porsche. One out of seven jobs in Germany depends on the auto industry.
From Bloomberg (
http://www.bloomberg.com/apps/news?pid=20670001&refer=home&sid=a46FG2hBzreg )
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The European industry's non-binding goal is to reduce emissions to 140 grams in 2008. EU regulators have discussed a mandatory cap of 120 grams a kilometer in 2012... Porsche's least-emitting vehicles are versions of the Boxster and Cayman sports cars, which each produce 222 grams of CO2 per kilometer.
It will cost carmakers an average 2,532 euros ($3,297) a vehicle to meet both targets, according to an October 2006 report for the commission. The cost to Porsche may average 4,650 euros a car...
The cap may change the landscape of the European car market, pushing people to buy smaller cars with smaller profit margins, said Tadashi Arashima, head of Toyota Motor Corp.'s European unit, which is based in Brussels....
Toyota's Aygo subcompact and Prius hybrid cars already emit less than 120 grams of carbon dioxide per kilometer. Other models below that level include versions of Stuttgart-based DaimlerChrysler AG's Smart ForTwo, Peugeot's 107 and 207, as well as Fiat's Panda and Grande Punto hatchbacks. Renault has some Megane compact hatchbacks that fall in that category....
Wendelin Wiedeking, Porsche's chief executive, warned of a "business war in Europe". Speaking to shareholders on January 26, he said: "It's the French and the Italians up against the Germans. "Wiedeking, DaimlerChrysler's Dieter Zetsche and Bayerische Motoren Werke AG CEO Norbert Reithofer, along with the heads of the local units of General Motors Corp. and Ford Motor Co., signed a Jan. 26 letter to the commission saying the new rules would be "technically infeasible.''
"Auto exports will suffer, imports will increase, the sale of upper- and mid-range vehicles will fall dramatically and jobs will migrate from the EU,'' they wrote, citing the commission's own study of the regulation.
About 15 million cars are sold annually in the EU, where about 2 million people are employed making vehicles and their parts. That represents 7 percent of all EU manufacturing jobs.
(snip)
``If legislation makes it very expensive for German cars to reach emissions limits, it could make them less attractive compared with smaller French and Italian cars,'' said Peter Braendle, a fund manager at Swisscanto Asset Management in Zurich, which manages $44 billion including DaimlerChrysler and Peugeot shares. ``That could shift investment decisions.''
(snip)
Wiedeking told Porsche shareholders that sports cars and sport utility vehicles such as Porsche's should be exempt from any new rules or subject to different regulations based on horsepower or fuel efficiency.
Porsche's most powerful vehicle, the Cayenne Turbo S SUV, seats five and generates 520 horsepower, more than twice as much as some 18-ton delivery trucks. With a price tag that starts at $111,600, it also produces 378 grams of CO2 a kilometer.
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Recently Jacques Chirac demanded that the United States ratify the Kyoto Protocol and a future agreement that will take effect when the Kyoto accord runs out in 2012. "If the U.S. does not sign the agreements, he said, a carbon tax across Europe could apply to imports from nations that have not signed the Kyoto treaty.The European Union being the largest export market for American goods, such a tax could encourage compliance."
The US Senate voted 95 to 0 back on July 25, 1997 for a "sense of the Senate" resolution, that the United States should not be a signatory to any protocol that would result in serious harm to the economy of the United States". On November 12, 1998, Vice President Al Gore symbolically signed the protocol. The Clinton Administration never submitted the protocol to the Senate for ratification. (I have read that 57 of those 95 senators are still in office.)
I think it would be instructive for President Bush to send the Kyoto Protocol to the Senate now, just to see what they do to it. And maybe to let Mr Chirac know what we think of his threats.... which, incidentally, would require the tearing-up of of every multilateral trade agreement that France and the US are signatories to. (see Smoot-Hawley)